FTC Revises Data Security Orders as ‘Better Guidance for …January 24, 2020
Accounts receivable management industry companies reviewing their data security policies and procedures can look to the Federal Trade Commission’s recently revised and improved orders issued in the event of a complaint or data security breach.
Data security legislation and regulation is also one of the state trends to follow this year, as reported in Collector magazine, and employee education on risks to watch for in the digital world is also critical.
The FTC’s orders, used for seven various companies already in 2020, reflect changes suggested during the FTC’s Hearing on Competition and Consumer Protection in the 21st Century and data security orders in December 2018.
“Since the early 2000s, our data security orders had contained fairly standard language. For example, these orders typically required a company to implement a comprehensive information security program subject to a biennial outside assessment,” said Andrew Smith, director of the FTC Bureau of Consumer Protection, in a news release.
A June 2018 U.S. Court of Appeals for the 11th Circuit decision in LabMD vs. the Federal Trade Commission that struck down an FTC data security order as “unenforceably vague,” also influenced the revisions, according to the news release.
The FTC’s data security order improvements include:
- “First, the orders are more specific. They continue to require that the company implement a comprehensive, process-based data security program, and they require the company to implement specific safeguards to address the problems alleged in the complaint. Examples have included yearly employee training, access controls, monitoring systems for data security incidents, patch management systems, and encryption. These requirements not only make the FTC’s expectations clearer to companies, but also improve order enforceability.”
- “Second, the orders increase third-party assessor accountability. We still rely on outside assessors to review the comprehensive data security program required by the orders, and now we require even more rigor in these assessments. For example, the orders clearly and specifically require assessors to identify evidence to support their conclusions, including independent sampling, employee interviews, and document review. The assessors must retain documents related to the assessment, and cannot refuse to provide those documents to the FTC on the basis of certain privileges. When FTC staff can access working papers and other materials, they are better able to investigate compliance and enforce orders. Perhaps most importantly, our new orders give us the authority to approve and re-approve assessors every two years. If an assessor falls down on the job, we will withhold approval and force the company to hire a different assessor.”
- “Third, the orders elevate data security considerations to the C-Suite and board level. For example, every year companies must now present their board or similar governing body with their written…